Nigeria signs energy deal with Russia's Gazprom
09.03.08, 1:37 PM ET
Nigeria - (Adds analyst comment)
By Tume Ahemba and Nick Tattersall
LAGOS, Sept 3 (Reuters) - Russian gas giant Gazprom has signed an oil and gas exploration agreement with Nigeria, a deal which could strengthen its position as a supplier of natural gas to Europe and North America.
The Nigerian National Petroleum Corp. (NNPC), the country's state-run oil firm, said it had signed the memorandum of understanding (MOU) with the Russian gas export monopoly on joint venture projects, but gave few details.
"The MOU covers petroleum and gas exploration, as well as power," NNPC spokesman Levi Ajuonoma said.
"Details of the specific projects will be worked out later along with the quantum of money involved," he said.
The Nigerian government said in January that Gazprom would spend between $1 billion and $2.5 billion developing the resource-rich country's gas sector.
Gazprom has said that investing in Nigeria's liquefied natural gas (LNG) made strategic sense as it was much closer to its main North American market than Russia.
Nigeria has the world's seventh-largest proven gas reserves, but has been unable to develop its gas industry to anywhere near full potential because of a lack of funds and regulation.
Some industry experts in Europe see Russia's tentative deals with African OPEC members as an attempt to get a stranglehold on Europe's natural gas supplies. Gazprom already provides a quarter of Europe's gas.
Gazprom Chief Executive Alexei Miller said in April that the world's largest gas company was in preliminary talks with Nigeria about participating in a multi-billion dollar project to pipe Nigerian gas to Europe across the Sahara.
Gazprom has also agreed with Algeria's oil company Sonatrach to seek out and commercialise natural gas together after a visit to Algiers last year by former Russian President Vladimir Putin, now prime minister.
IN WHOSE INTERESTS?
Russia's renewed interest in Africa, which waned after the Cold War, is partly about diversifying energy interests and securing raw materials for a fast-growing economy.
But given Africa's role as an alternative energy source for European nations reliant on Russia, it is also seen by some as part of an increasingly assertive Kremlin foreign policy.
The deal is also likely to divide opinion in Nigeria.
Analysts say some decision makers in Nigeria want to send a warning to foreign oil firms that they have new rivals, like China and Russia, while others fear Nigeria will be exploited against its interests as part of a bigger geopolitical game.
"The Russians have been lobbying fairly hard to gain access for a year and they have supporters and opponents," said Antony Goldman, analyst at London-based risk consultancy PM consulting.
"Advocates of the deal with the Russians see it as a way of putting pressure on complacent international oil companies while opponents are concerned about the agenda behind Russia's interest in Nigeria's gas potential," he told Reuters.
Nigerian President Umaru Yar'Adua has said that foreign firms will have to divert a greater proportion of their natural gas output in Nigeria for domestic use over the coming years as the country tries to end a crippling power crisis.
The government has said it wants to boost economic growth by generating much more power with gas, which unless more gas production facilities are built could lead to a shortfall in gas available for export and further tighten global supplies.
"A lot of countries are interested in the Nigerian oil and gas sector and Russia is one of them," Ajuonoma said.
"The present government is also very keen to see that Nigeria realises its full potential in oil and gas for the benefit of the people," he added. (Editing by James Jukwey)
